letter - National Rural Housing Coalition

Jul 9, 2018 - Committee on Banking, Housing and Urban Affairs. Committee on Appropriations. Hon. Sherrod Brown. Hon. Nita Lowey. Ranking Member.
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NATIONAL RURAL HOUSING COALITION 1331 G Street, N.W., 10th Floor, Washington, DC 20005  (202) 393-5225  fax (202) 393-3034  http://ruralhousingcoalition.org/

July 9, 2018

Honorable Jed Hensarling Chairman Committee on Financial Services

Hon. Rodney Frelinghuysen Chairman Committee on Appropriations

Hon. Maxine Waters Ranking Member Committee on Financial Services

Hon Richard Shelby Chairman Committee on Appropriations

Hon. Mike Crapo Chairman Committee on Banking, Housing and Urban Affairs

Hon. Patrick Leahy Vice Chairman Committee on Appropriations

Hon. Sherrod Brown Ranking Member Committee on Banking, Housing and Urban Affairs

Hon. Nita Lowey Ranking Member Committee on Appropriations

On June 21, 2018, the Administration released “Delivering Government Solutions for the 21st Century”, its recommendations to reform and reorganize the federal government. The Administration proposal includes a drastic reorganization of government agencies including transfer of the United States Department of Agriculture (USDA) rural housing loan guarantee and rental assistance programs to the Department of Housing and Urban Development (HUD). The National Rural Housing Coalition is a national membership organization that supports improved federal rural housing programs and policies. We write to register our opposition to the Administration’s plan. It will not improve administration of the rural housing programs nor will it help accomplish the mission Congress established in Title V of the Housing Act of 1949, as amended. It will do little to improve housing conditions in rural America. The Administration argues that HUD provides more housing in USDA eligible areas, that the move would improve service delivery, and housing programs administered by HUD will allow both agencies to “focus on their core missions and, over time, further align the Federal Government’s role in housing policy”. We disagree. The Administration contends that HUD makes more FHA guaranteed loans than USDA in zip codes also served by USDA. The report ignores the principal and important differences between the two guarantees: USDA is a means-tested guarantee for low and moderate income households with an average loan of less than $145,000. Average annual income for households participating in the USDA program is approximately $60,000. FHA loans are not means-tested and the average FHA loan is over $50,000 larger at $201,000. The reorganization also proposes moving USDA rental assistance to HUD because it is similar to HUD’s section 8 voucher authority. The vast majority of rental assistance is used in section 515 rural rental housing developments. Apparently, the Administration would leave the section 515 mortgage portfolio of

NATIONAL RURAL HOUSING COALITION 1331 G Street, N.W., 10th Floor, Washington, DC 20005  (202) 393-5225  fax (202) 393-3034  http://ruralhousingcoalition.org/

14,000 developments and estimated $5.6 billion in preservation and repairs needs at USDA, creating the potential for an administrative nightmare for both owners and tenants. Recent USDA budgets have eviscerated rural housing and community development programs, proposing elimination of all rural housing direct spending except rental assistance. Consistent with those budgets the transfer plan ignores a number of these programs, including:      

Direct home ownership loans; Mutual self help housing grants; Home repair loans and grants; Multi-family housing revitalization financing; Farm labor housing loans and grants; and Guaranteed rental housing loans.

This proposal envisions a federal housing assistance system that does not respond to rural housing needs. It presumes elimination of any number of important and successful rural housing programs, leaves some 400,000 tenants of USDA financed rental housing and project owners caught between two federal agencies as the price tag for preserving rural rental